Cement companies to post robust Q1 results, India

Published:
19 July 2006

Cement companies are likely to report impressive June quarter results, driven by continuing demand growth and a sharp rally in cement prices.

The analysts said that the April-June 2006 period could be one of the best quarters for the cement industry, as impressive growth sales volumes and higher price realisations are likely to have boosted profitability of most of the companies.

Companies with high leverage to movement in cement prices – such as ACC, Ultratech and India Cements – are likely to have seen particularly robust profit growth in the quarter, while higher raw material and fuel costs might have adversely impacted the operating margins of some, they added.

India Cements’ robust set of Q1 figures, which were announced on Monday, have further boosted the expectations for impressive results from other cement makers.

ACC is scheduled to announce its Q1 results tomorrow, while GACL and Grasim would announce their quarterly figures on July 20 and July 29, respectively.

Domestic brokerage firm Sharekhan said that the recent spike in cement price across the country would drive the earnings of most cement companies.

Both ACC and UltaTech were likely to post improved operating margins due to gains from cost savings and higher leverage to the firm cement prices, analysts at Sharekhan said.

Sitesh Sinha of Karvy Brokerage Ltd said that Q1FY07 was likely to be one of the best quarters for the cement companies in the recent past driven by sustained demand, limited capacity additions and higher prices.